Student loan debt has increased 39%

Saturday

Nov 9, 2013 at 6:00 AMNov 9, 2013 at 9:54 AM

By Jacqueline Reis, TELEGRAM & GAZETTE STAFF

WORCESTER — The average student debt at graduation for students in Massachusetts who took out loans is $27,181, according to the president of the Association of Independent Colleges and Universities in Massachusetts. Nationally, the average annual student loan amount increased 39 percent between 2000-1 and 2010-11, and a legislative hearing at the College of the Holy Cross Friday raised some of the reasons why.

On one hand, leaders of private colleges said, they have been trying to keep tuition and fees down, but families need more and more assistance. Family incomes have decreased, said AICUM President Richard Doherty.

Assumption College President Francesco Cesareo said his school has been increasing nonloan aid to students for the past five years. That rate of increase was more than double the rate of increase for tuition, yet families' need for aid continues to rise, he said.

Meanwhile, said Mr. Doherty, need-based state financial aid such as MASSGrant does not have the purchasing power it used to. In 1988, a MASSGrant typically would cover 80 percent of tuition and fees at a public institution, he said. Now it covers approximately 8 percent at a public college or university. MASSGrants can also be used at private colleges and universities.

At public colleges and universities, a long-term drop in state support has left leaders with fewer options but to raise student fees. "That's what caused the problem," said Fitchburg State University President Robert V. Antonucci. At public institutions in Massachusetts, the average student loan debt at graduation is $22,000, he said.

His advice to students is to finish college in four years, avoid borrowing if they can, and arrive at college with credits they earned through dual enrollment programs while in high school.

Students and families, on the other hand, don't seem to know the magnitude of the debt they're taking on, how it's structured, or how to shop around for a price tag, said Barbara Anthony, undersecretary of the state's Office of Consumer Affairs. Before students sign any promissory note, she said, someone should sit down with a student and look at what the student's eventual income is likely to be in his chosen field, how much student loan repayments will take out of that and what likely disposable income will be left.

"I'm not trying to deter students from getting a higher education. What we're talking about here is going in with your eyes open," Ms. Anthony said. "The financial literacy is at zero."

Lynne Myers, director of financial aid at Holy Cross, said students don't always ask the right questions. Looking at a college's tuition and fees, for instance, doesn't tell you what students actually end up paying or if the college will meet all of your demonstrated financial need. Her advice was for students not to attend a private school that will not meet their need.

And families, she said, are still looking at colleges as expensive as Holy Cross without having saved anything.

Even when a student is savvy enough to get the loan and graduate, there's no guarantee the company that holds the loan will manage it in a responsible way. Joy Cirba of Spencer, for instance, told the panel how the company that bought one of her daughter's loans refused to extend its repayment incentives to her even though she was now its customer. After she wrote to a group of people, including state Sen. Stephen M. Brewer, D-Barre, the company agreed to honor incentives from the loan's original bank. Still, Ms. Cirba said, she doubts the bank will advertise that possibility to others in the same situation.

She also said families should be able to qualify for better interest rates if they have good credit scores, the way they can on car loans or mortgages.

Quinsigamond Community College President Gail E. Carberry said her school works hard on articulation agreements to help students move from two years at Quinsigamond to a four-year program elsewhere. Her recent moves to change some English and math requirements at Quinsigamond have drawn opposition from the faculty, who claim she has not followed the usual process.

Friday, she told the legislative panel that aligning programs and courses with other institutions is sometimes "controversial on our campus. Our faculty is somewhat traditional … but we're getting there, piece by piece."

State Sen. Eileen Donoghue, D-Lowell, who is chairwoman of the Senate Subcommittee on Student Loans and Debt, told Ms. Carberry she has heard over and over again that attending community college for two years before transferring elsewhere is a good way for students save money.

"Any support you can give us in that regard from your bully pulpit is much appreciated," Ms. Carberry told her.

Friday's was the sixth hearing the subcommittee has had around the state, and unlike the first five, it did not attract many students. One more meeting remains, at 11 a.m. Nov. 18 at Berkshire Community College.

People who would like to submit testimony can also do so by email to either of the subcommittee's co-chairs: Ms. Donaghue at Eileen.Donoghue@masenate.gov or Rep. Paul Mark, D-Peru, at Paul.Mark@mahouse.gov.

They hope to make recommendations to the Joint Committee on Higher Education in March.